Contracts, Torts, and Property Law

• Study notes on contract law, torts, obligations, property, and various legal principles
• Tort: A wrongful act causing damage, leading to legal liability, distinct from contract breach
  • Requires a wrongful act, damage to the other party, and a causal link
  • Mass torts occur when an act causes damage to many people
• Injunction: A court order to perform or abstain from a specific action
• Obligation: A legal duty to act or refrain from acting in a certain way
  • Formal obligations are recognized by law, such as contracts
• Property: The right of ownership, possession, use, and enjoyment

Types of Property

• Personal property: Movable or intangible items
• Real property: Land and immovable attachments

Contracts

• A widespread legal institution; agreements are sometimes created via the web on websites
• The definition varies across legal systems
  • The definition may or may not include a specific action

US Law School

• Students usually begin their Juris Doctor (JD) degrees in their early to mid-20s
• Graduates often spend two years clerking for judges to gain insight into judicial law-making

Private Law in the US

• Distinction exists despite the common law system
• Private lawyers work for individual clients
• Corporate lawyers can earn high hourly rates and often work on contingency fees

Sources of Private Law in the US

• Constitutions
• Statutes (codes)
• Administrative Regulations
• Contracts
• Courts & the Common Law (most important source)

Hypothetical Scenario

• A Board of Directors (BOD) determines CEO compensation
• Lawyers advise the BOD by referencing previous cases to anticipate court reactions
• Outcomes can be uncertain due to unpredictable precedents

Shareholders Agreement

• Ensured shareholders vote together and protects minority shareholders
• Majority shareholders can approve mergers and appoint BOD members
• The agreement ensures they vote in alignment with minority shareholders' interests

Corporate Law Regulation

• Extensive reporting requirements help shareholders understand BOD actions
• Shareholders often sue BODs for alleged underperformance or excessive compensation
  • Example includes Tesla BOD being sued for overpaying members
• Regulations mandate BODs to disclose meeting frequency

Common Law Characteristics

• Uncertain, making client advising challenging
• Lawyers acknowledge that advice may not be 100% accurate
• Outcomes depend on judicial interpretation and attitudes
• Courts develop general standards based on facts and circumstances
• Rulings can vary among courts even on similar cases
• Adaptable to changing circumstances without legislative amendments
  • For example the economy changes & then the law changes

US Court System

• Two primary types consisting of Federal and State with appointed and elected individuals
• Judges are often picked politically based on the president's/governor's ideology
• Presidents seek to appoint younger judges for longer tenures

Federal Courts

• Supreme Court judges are appointed by the US president
• Current composition leans Republican (6-3)

State Courts

• System has 2-3 court layers depending on the state
• Each state has its own Supreme Court
• Selection methods vary
• Half appoint judges, half elect them

Citizens United v. Federal Election Commission

• Concerned free speech rights of corporations and political contributions
• The Supreme Court's ruling was lengthy and ambiguous

US Judges

• Experienced lawyers are appointed as judges after working in the industry
• New appointees receive limited formal training

Supreme Court & Mandatory Arbitration

• Corporations increasingly use mandatory arbitration clauses in employment contracts
• Employees are often forced to go to informal hearings which are often less successful
• Consumers face similar clauses, limiting legal recourse
• The Supreme Court has generally upheld mandatory arbitration

Judicial Selection Process

• Appointment and election processes are problematic and becoming increasingly politicized
• Judges can be impeached by a 2/3 majority in the state Supreme Court
• One judge was elected after campaigning against abortion restrictions

State of Delaware

• Incorporated ("based") in DE by ~70% of large US corporations
• BOD members choose the state of incorporation
• Regulations tend to favor management
• Laws are favorable to the management
• Helps to limit shareholder decisions and lower liabilities for BOD decisions
• BOD members want to stay in office forever
• Favorable laws attract corporate taxes
• DE does not have sales tax (VAT)
• State code is similar to California and Colorado
• DE advantage is the judges

DE Court System

• Courts determine BOD member duties like loyalty to the corporation
• Delaware requires a BOD but lacks specifics on what they need to do
• State Supreme Court decisions favor management in fiduciary lawsuits

Appointment in DE

• Judges are appointed by the governor
• Pro-management preferences are screened by the corporate bar association
• Governors seek candidates from pro-management law schools and those who have represented big corporations
• Court has historically lacked diversity, mostly consisting of white men
• Attracts corporations due to code and rulings
• Corporate lawyers study its laws

Independent Directors

• Independent directors make decisions benefiting shareholders
• Independence, from the CEO, is vital for investors and legal compliance

Non-Independent Directors

• Includes officers, those terminable by the CEO, and individuals with personal relationships with the CEO

Basic Principles of Contract Law

• Found in both Civil & Common Law with the following 4 Principles

1. Freedom of contract
2. Binding Force of Contract
3. Principle of Informality
4. Contractual Fairness

Freedom of Contract

• Parties can agree to the terms they desire with whomever they like
• Freedom includes deciding content, whether to contract, and with whom to contract
  • Issue: Standard forms may leave one party without bargaining power
  • Regulations protect consumers from abusive general forms

Binding Force of Contract

• Once concluded, a contract binds both parties
• Parties must perform contractual obligations
• Courts can intervene if a party fails to perform
• Binding force can be overridden by clauses violating the law

Principle of Informality

• Contracts generally do not require a specific form unless mandated by law
• Binding force determined by will

Contractual Fairness

• Requires adherence to the contract
• Procedural fairness protects against imperfect contractual autonomy
  • Courts focus on procedural, not necessarily substantive fairness

Substantive Fairness

• Contracts should align with public interest
• Tool for distributing social equality
  • But "public interest" is inherently political
  • Courts usually reject this view

What is Contract Law?

• Rules governing transactions, establishing enforceable rights and obligations

Sources of Rules in Contract Law

• Multilevel legal system
  • Party agreement
  • Official legislations (domestic, European, international)
  • Rules made by non-state organizations

Battle of Forms

• Conflicting general forms exchanged by contracting parties
• 3 Rules for battles a) Dutch law's offer rule, b) English law's last-shot rule, c) German law's knockout rule

Dutch Law's Offer Rule

• The offer standard form prevails

English Law's Last-Shot Rule

• Each counter-offer is the last form presented

German Law's Knockout Rule

• Only non-conflicting standard conditions become part of the contract
• Conflicting conditions are invalidated, gaps filled by statutory law

Official Sources of Contract Law

• Default rules can be changed by parties
• Mandatory rules are unchangeable; breach can void the contract

Domestic Law

• Rules produced by legislature/parliament civil law or courts common law
• Civil codes are very important
• Civil code reforms have incorporated court doctrines and European laws
• Common Law contains rules found in case law and acts
• Common Law lacks official definitions
• Several statutes regulate specific areas of contract law
• Contracts tend to be longer and more detailed in Common law
• Judge-proof contracts seek to limit judicial interpretation

Civil Law

• Typically includes official definitions of a “contract”
• Includes directives that impact areas of contract law
• States have limited decision making abilities depending on the strictness of the directive
• Detailed directives provide little freedom of choice

European Single Market

• Main goal of the EU
• Facilitated by harmonizing member states’ legislations
• TEU Article 14 allows legislative actions to harmonize contract law for the integration of the markets in the EU

Supranational/International Law

• Aims to harmonize contract law through organizations such as:

1. The Hague Conference on Private International Law: Develops multilateral legal instruments
2. UN Commission on International Trade Law (UNCITRAL): Develops cross-border legal frameworks

• UN Convention on Contracts for the International Sale of Goods Vienna Convention 1980: Provides rules regarding cross-border sales contracts

Informal Contract Law

• Includes both soft law and soft law
• Soft law principles represent opinion evolution
• May be adopted through binding agreements

Unidroit

• International organization that works toward unification of private law
• Known for the principles for international commercial contracts where first edition was written in 1994 and last updated in 2016
• These principles are often incorporated in contracts, though not binding
• Clauses reference international principles

Choice of Law

• Parties agree on the country whose law will apply to the contract
• UK and Swiss law are common choices

Competent Court Clause

• Parties agree which court they will use in case of disputes

Arbitration Clause

• Parties decide to solve disputes through an arbitration tribunal instead of a court
• Principles of European Contract Law 1992-1996
• Draft Common Frame of Reference of European Private Law 2009
• Used to identify similarities between different legal systems and combine these similarities into common rules\

Definition of General Contract

• A legally binding agreement
• Arises from agreement of 2 or more parties willing and consenting
• Places personal rights and obligations on parties

Definition of Civil Law Contract

• Patrimonial characteristics contract which will be enforced by the law when the consent between the parties is genuine and when certain requirements described in the law are fulfilled
• Italian law establishes that Contracts consist of 2 or more parties to establish, regulate, or extinguish a legal relationship amongst themselves Article 1321
• Classification of Contracts Napoleonic code
• Each party receives benefits and obligations

German Law Exceptions

• Only has Consensual Contracts

US Definition of Contracts

• Restatements of contract: A contract a binding promise, the breach of which results in a reproach from the law

Contract Definition:

• The total obligation in law that results from the parties agreement and is affected by this act and any other applicable rules of law
• Agreement = the binding of fact in accordance with the definition chosen by the parties

Process of Offer and Acceptance

• Highlights the difference in legal systems on how they identify what the exact moment a contract came into existence
• A contract is composed of 2 different acts: An offer & an agreement
• Contracts require existence of an agreement
  • The intention to create a legal relation AND
    • Common Law: Consideration
    • Civil Law: Cause
• Requirements for legal capacity of the parties
• Follow Formalities

Requirements of a Contract Offer

• It is intended to result in a contract and contains sufficiently definite terms
• The intention of the proposal to be bound, and the terms that are intended to bind it
  • Price, delivery, time, etc.
• Otherwise it is considered an Invitation to Treat-
• UK Case: Gibson v Manchester City Council 1979
  • The HoL decided that the initial letter to be sent to the buying tenants was not a legal offer but an Invitation to Treat

Contract Offers

• Offers can be offered to specific persons either in the public domain or at a private party
• In some jurisdictions, they can be interpreted as contract offers made to the public that the public can reasonably believe were made
• In other jurisdictions, they are interpreted as invitations to treat

Country Perspectives on Advertisements

• If it contains all the essential elements than the French law considers Advertisements to be a binding offer to the public
• English and German civil law does not

Carbolic Smoke Ball Case

• Company claimed that its product, the carbolic smoke ball, could prevent users’ contraction of the Spanish Flu
• Company deposited 1000 to show its sincerity, giving it an official binding offers
• Advertisement for reward is legally binding

Goods Displayed in Shop Windows

• French Law - Offers; shops need to stick with the price tags that they show on goods through their windows
• English and German Law - Invitations to Treat; give shops the chance whether to accept a certain good or sell

Can Offer Be Revoked?

• One can revoke an offer
• Need to protect offerer’s to withdraw the offer and offeree to accept the offer
• All Legal Systems: Offers can be withdrawn to the offeree
• Can use distant communication as well

German Law

• Offerer can not revoke unless offer can be revoked

English Law

• Before the offer is accepted, one can revoke at any time, even if deadline is established

American Law

• Firm offers are not revocable during time state

French Law

• Offerer can revoke what they want before acceptance
• Offerees can be protected and ask for damages because of the revocation of the offer

In order for the offer to be real the following must be accounted

• It’s rejected by offeree
• A counter-Offer is made (An acceptance that is different from the proposed offer)
  • A counter offer terminates original offer-
• The offer’s deadline date
  • If No Deadline Date was mentioned
  • Face-to-Face: Offer must be accepted immediately
  • Remotely: Offer must be accepted in time
• Perishable goods should be accepted immediately

Can acceptance of offer be done?

• Acceptance of offers can consist of both written and oral formats
  • No Specific requirements, but be clear to offeree if one agrees with terms of offer Mirror Image Rule and Counter offer
• Some offers specify method of accepting the offer If it results in the same outcome its still considered valid Silent reactivity will not amount to acceptance
• There are exceptions with silent reactivity -If there are used ways of saying the words a certain way

When does Acceptance Take Effect

-When both parties are present in instant communication

• Externalization theory
• Exposition theory
• Receipt theory
• Actual notice theory

Entores vs Miles case 1955

• The acceptance through Telex needed to be evaluated through the Receipt Theory Mailbox Rule
• English Law was applied-

Acceptance Conclusion

• Determine Offer to be revoked
• Transfers transfer of the contract
• The law is applicable or not

Intent/Will of the Parties

• Need legal intention
• Important factors in mental state
• The parties need to have the intention to be legally bound by the contract so that each of them would be able to bring the other to court in case of breach of contract
• Important Factor is the mental state of mind of person -Its impossible to determine this -The parties need to have intention of being legally bound to each other Official factor: objective meaning in the worlds the parties used in the agreement Analysis: Look at what words and standards would suggest to reasonable person in same Position Each party has difference views of the contract and trial will commence and each individual must reach a conclusion
• Everyday Meaning Technical terms technical meanings prevail over meaning in everday speech
• Courts may consider what is custom in those certain areas of law or geographical location If indications are regarding currency in payment Expertise of the parties in the contract

Detirmining intention

• Earnestness test (problematic in case gifts as formal agreement)

Agreements

• Commercial Agreement: BINDING by both parties and need legal relation in common law (contracts that is binding)
• To not need to be it must be stated as
• Subject to contract
• Agreement in Honor
• This is not binding Gentlemen Agreement

###Gratuitous Agreement

• Disadvantageous transactions, not binding to prove the party for agreement

Social Agreement

• Usually not considered binding unless their s unequivocal Those promise can have economy value A agreement to share costs are not binding

Domistic agreement

Husband Wife in India got married And husband said she will pay her mom £30K per month The wife wanted the husband to pay per mom per month Not what they wanted/ love isnt considered

Consideration Law

• Napoleon code oringinged wuth nap code
• What agreements do deserve with law
  • Court see if parties are Legit

Criticism of it

Scholars argued that these since they can determine of contract Intention, they can create legal nature of obligation France: Causa- Dutch: eliminated cauta Still exit in the majority Past consideration

Doctrines Courts Developed About

• Consideration be sufficient but dont need to be adequate

Legal question:

• Do wrappers constitute good consideration?
• Court decision said yes, its considered Nestle to promotion value with wrappers
• Peppercorn theory: if exchanged its worth something

Doctrines Summary

• Past consideration is not good Promisies and performers must be done same time Any exchange with action and the person can no money
• If money not received then you want to ask for claim
• The obligation did not met with contracts
• No good for partial paid debt
• Creditor can not give partial amount for total paid debts
• Like being able to pay off a percentage with what they want now
• If one gave something earlier this is okay
• Only a third part can be enforced If one make something and party to take them somewhere If there a relationship then there is no right there
• A existing has no valid consideration Not do to existing dutity like to give anything, duty and duty of there Legal Can not do the contract

Deed Promsissory Estopped

• To allow signature
• With unilateral contract (deed)
• As a deed” act as a seal
• Delivery to benefit the deed Prommisssroy estopped: making promise even witho consideration

Courts

• Stilk v Marick
• Hartlery v Ponsonby Case
• Williams v Roffey Case

In Civil Law

• Not used in french baises Causa is by the goal

Legal Capacity

• Parties can only be bound if they have the Legal capacity

Requirements: 1.)Minors 2.)The Mental Health Parents give permission to void out contracts

• Contracts that meet daily necessities

• Contracts under custodian in order to have a valid obligation In civil law (Public Notary)

• Written and Valid Contract only

• Precantraucutal Duties Can claim when sell to consuemers

Pre Contract Duties

Parties free for entering contract and or abandon

Civil Laws

• Recognzies for contract

French Code

• Conduct throught a requirement
• Breach can recive damages

German

• Obligations pre contact do exit
• Prooteion relies other right Italian code the Parties must in good faith

EU and Non

Claim damages Agreemtn requires to have good intent

Negative Contract and Positive contract

Claim Damages in Common Law With good duties , no contract need to be

Pre Contract Responsites

Principle informality, no need a form or specific cases Ex.) Deed, written contracts If one of two parties need the other or a formal agreement must require Can exist to sign and write

• Can not exist through claims

Principles good faith in the common law Absent because economics and autonomy

Civil

Open end and legal to the contract

Non Compililance

• Lack of a form

  • Provided by law

• performed on both parties code test Good faith can be sued by others not there if theres to breach the inforamtion If can claim a can to get and will damage through there If must justify be other

Good Faith

Other ways : not being there